Nearly every industry has been impacted by the Covid-19 pandemic, and the housing market is no exception. Things look very different than they did just...
How Do You Know When it’s Time to Downsize?
For many people, choosing to downsize can be an emotional decision — after all, you’ve spent years building memories in your home. Still, the time may come when you wonder if life could be easier, cheaper, and more enjoyable in a smaller space. Here are five signs that it might be time to downsize.
You’ve Got Too Much Space!
The most obvious sign that you’re ready to downsize is that you’re no longer using all of the space in your house. Maybe the kids have finally packed up their things and moved out of their rooms, or you’ve noticed that there haven’t been parties in the basement rec room for years.
Having a lot of barely-used rooms in your house can be a pain, financially and otherwise. All of those rooms need to be cleaned, whether someone is living in them or not. With a larger home comes higher heating and cooling costs. Plus, as anyone familiar with Marie Kondo can tell you, empty rooms can be magnets for clutter, creating a big headache for you down the road when it’s finally time to clean them out.
If your extra rooms are becoming more of a burden than a benefit, it might be time to take a step back and honestly assess how much space you need.
You’re Drowning in Maintenance Costs
The longer you stay in your home, the more you can expect to pay for maintenance and repair. That’s normal; according to Forbes, you will generally spend between 1 and 4% of your home’s purchase value annually on repairs. When your house is newer, it will be closer to 1%, but if your home is more than 25 years old, it will be more like 4%. A 3% difference might not seem like much, but on a $300,000 home, that’s $12,000 as opposed to $3,000 — a $9,000 difference each year. Over a 10-year period, that’s about $90,000 more, which is no small amount, especially if you have retirement plans on the horizon. And if you don’t keep up with the maintenance, you could be looking at an overall decrease in the value of your home.
A good rule of thumb is to spend no more than 4% of your net income on home repairs each year. If you see the costs creeping higher, you may want to consider moving to a home that requires less overall maintenance. And if the costs are too much and you can do with less space, consider moving to a smaller — and perhaps newer — home.
You’re Retired (Or Planning to Retire)
If you’re planning on retiring or have already done so, chances are you’ve thought about moving. According to a survey by Voya Financial, 50% of respondents planned to move to a more desirable location when they retired. And many of those people wanted to go smaller — the number of people who wanted to scale down was more than double the number of people who wanted to buy a larger home. Whether you’re seeking warmer weather, better proximity to family and friends, or a more energy-efficient home, retirement gives many people a logical transition point to move to a right-sized place.
When you’re picturing your life on a fixed income, the cost-savings aspect of a smaller home is an obvious perk. Just keep in mind that if you’re planning a substantial move, particularly if you’re moving from the suburbs to the city, things outside your housing costs might be more expensive, offsetting what you saved by moving to a smaller home. For example, if your annual income in the Oklahoma City area is $50,000 and you are planning to move to Los Angeles, you would need to earn more than $72,000 to maintain the same standard of living. Use this calculator to see how far your money will go in your location choices before taking the plunge.
You’re Thinking About Your Health
Life in a large house requires a lot of physical activity: cleaning, walking up the stairs, doing minor repairs, and more. As we get older, these tasks begin to take longer, and the prospect of taking the laundry to the basement before going to bed on the second floor can shift from a minor inconvenience to a full-blown annoyance or even a possible safety hazard.
A smaller home can not only save you the worry of moving around a multi-story house, but it can also help you maintain a more active lifestyle. A smaller house is easier to clean on your own, and with less time spent caring for a large space, you can go for walks, stay social, and enjoy going out in your community.
You Stand to Save (or Make) Money
Smaller lawn to maintain, less square footage to heat and cool, lower property taxes: the opportunities to save money by downsizing one’s home are compelling. One way to estimate your savings in utilities is to divide the square footage of your house by the monthly cost of heating and cooling. For example, if your house is 3,000 square feet and you spend an average of $400 a month on utilities, then you’re spending about $.13 per square foot. If you moved to a 1,800-square-foot house, your bill would be more like $234 per month. That’s a savings of nearly $2,000 a year — money that can go into your retirement account, fund a vacation, or help buy a new car.
On the flip side, there are a number of costs associated with moving, even to a smaller space. You’ll want to take into account the realtor’s commission, closing costs, inspection fees, and the cost of the move. If you haven’t paid off your mortgage and your loan has a penalty fee for paying it off early, add that to the expense column, too. You may also want to buy new furniture for your smaller space. Of course, if the value of your current home is much higher than that of the downsized homes you’re considering, then your proceeds from the sale may easily cover these short-term expenses — or even help you make a larger down payment so that you can further reduce your monthly costs going forward.
Curious about your options? Contact Timbercraft to see if one of our high-end, energy-efficient homes might be the downsized home of your dreams.Tags: downsize, new construction okc, oklahoma city new homes